Well-connected rail systems are expected to transport more than half the daily commuting traffic. Which are the leading rolling stock suppliers in the metro, mainline, and HSR segments in China? Where are the new opportunities in rolling stock for rail? What is the market share of the rolling stock in rail applications? Which is the market leader in each rolling stock segment in China? What is the business environment of the Chinese rolling stock market?
Marketwatch also cited the positive earnings. In the absence of bad news, the path of least resistance for equities is up, Terry Sandven, chief equity strategist at U.S. Bank Wealth Management told Marketwatch. In a story headlined “Why the Dow Jones Had a Record Close Today.” Slate.com writer Sean Vitka penned, “The Dow Jones Industrial Average closed at a record today at 15,747. Theres really no good reason for the high, except that investors are expecting continued quantitative easing.
(Source: FactSet, November 1, 2013.) Consider General Electric Company (NYSE/GE), one of the major companies in the S&P 500. In the third quarter of 2013, revenues for the company declined 2.3% from the same period a year ago. (Source: Investor Relations, General Electric Company, October 18, 2013.) But the company is buying back its shares! The board of International Business Machines Corporation (NYSE/IBM), another big component of the S&P 500, authorized an additional $15.0 billion for the companys stock buyback program. The companys existing share buyback program already had $5.6 billion in it. (Source: Investor Relations, International Business Machines Corporation, October 29, 2013.) What When are stokcs the highest share buybacks do is increase the corporate earnings per share.
You can see the results in the chart near the top of this article. These results are not random. They are nothing like random. The waves are as clear as well, as clear as a big wave at Sunset Beach.
When a select group of speculative stocks trading at huge multiples of their earningsdue to high expectations for future earningsleads the market, it can be harder to sustain the gains than in a bull market led by companies with more-dependable earnings. “It reminds me of the tech go-go years of the late 1990s,” says Jack Ablin, chief investment officer of BMO Private Bank. Indeed, the recent gains in tech shares are reminiscent of the Internet-led bull market that created huge fortunes but ended in 2000 when the small group of expensive technology stocks that had powered the market higher suddenly collapsed, pulling the entire market down with it. That’s not something investors want to be reminded of. All of the current highfliers are getting investors excited for good reasons, including rapid customer expansions and strong growth prospects. But many investors have cause for worry, too.
Twitter (NYSE: TWTR ) begins trading on the New York Stock Exchange today. The company priced its initial public offering at $26 a share, giving it an implied $14.4 billion valuation. This has been a good year for IPOs, as the average one-day gain for new public companies is 17%. And there are plenty of reasons to be optimistic about Twitter’s long-term growth potential. Still, retail investors are often at a disadvantage in these situations. Brokerage firms, for example, will get less than 20% of today’s share offering to distribute to retail clients, according to TheWall Street Journal, meaning that early buyers will probably have to pay a hefty premium.
If the Fed actually wanted to foster economic growth it would stop the Quantitative Easing and let interest rates rise to where the free market decides. Then savers could earn a reasonable return on their savings, boosting incomes for many seniors and likely supporting increases in consumer spending. There might be a sharp adjustment in the stock markets, but then perhaps fundamentals will return and the stock market will go back to acting like it should. Banks and other large investors would look for actual projects to invest in rather than simply playing the stock market. The action of the stock markets, moving in opposite directions from economic news, is a clear signal that the Fed has distorted the stock market to the extent where only the Feds action matters.
The bottom line Although no one-day performance creates a stock market trend, todays results are noteworthy because they are occurring just as a change of outlook by many market observers and participants is taking place. The coincidence carries weight because it is affecting the broad market, meaning there are significant flows occurring to cause the shift. Theres another point. Forgetting the recent outlook change being discussed, todays uncharacteristic market makeup (for 2013, that is) is, by itself, a notable event.